http://www.sciencedaily.com/releases/2013/10/131028141516.htm

Scientists Wary of Shale Oil and Gas as U.S. Energy
Salvation:

Oct. 28,
2013 — After 10 years of production, shale gas in the United
States cannot be considered commercially viable, according to
several scientists presenting at the Geological Society of America
meeting in Denver on Monday. They argue that while the use of
hydraulic fracturing and horizontal drilling for "tight oil"
is an important contributor to U.S. energy supply, it is not going
to result in long-term sustainable production or allow the U.S. to
become a net oil exporter.

Charles A.S. Hall, professor
emeritus at the College of Environmental Science and Forestry,
State University of New York, Syracuse, is an expert on how much
energy it takes to extract energy, and therefore which natural
resources offer the best energy return on investment (EROI). He
will describe two studies: one of the global patterns of
fossil-fuel production in the past decade, and the other of oil
production patterns from the Bakken Field (the giant expanse of
oil-bearing shale rock underneath North Dakota and Montana that is
being produced using hydraulic fracturing).

Both studies show that
despite a tripling of prices and of expenditures for oil
exploration and development, the production of nearly all countries
has been stagnant at best and more commonly is declining -- and
that prices do not allow for any growth in most economies.

"The many trends of
declining EROIs suggest that depletion and increased exploitation
rates are trumping new technological developments," Hall said.

J. David Hughes, president of
the Canadian firm Global Sustainability Research Inc., echoes Hall
with an analysis of the Bakken Field and the Eagle Ford Field of
Texas, which together comprise more than half of U.S. tight oil
production. It shows that drilling must continue at high levels, to
overcome field decline rates of 40 percent per year.

Drilling rates of more than
3,000 wells annually in the Eagle Ford, and more than 1,800 wells
annually in the Bakken, are sufficient to offset field decline and
grow production -- for now. If drilling at these high rates is
maintained, production will continue to grow in both fields for a
few more years until field decline balances new production. At that
point drilling rates will have to increase as "sweet spots"
(relatively small high-productivity portions of the total play
area) are exhausted and drilling moves into lower-productivity
regions, in order to further grow or even maintain production.

The onset of production
decline will likely begin before the end of the decade, Hughes
said. "These sweet spots yield the high early production
observed in these plays, but the steep decline rates inevitably
take their toll. "

Arthur E. Berman, a
geological consultant for Labyrinth Consulting Services, Inc., of
Sugar Land, Texas, deems the U.S. 10-year history of shale-gas
extraction "a commercial failure. " However, he says,
this will not be the case forever. "Prices will increase to,
at least, meet the marginal cost of production. More responsible
companies will dominate and prosper as the U.S. gas market
re-balances and weaker players disappear."

Hughes sums up: "Tight
oil is an important contributor to the U.S. energy supply, but its
long-term sustainability is questionable. It should be not be
viewed as a panacea for business as usual in future U.S. energy
security planning."